Alcoa reports Q4 revenues at $2.44B vs $2.47B estimate

Alcoa earnings

  • Revenues estimates ranged from $2.45B to $2.52B
  • EBITDA $346M vs $334.3m expected
  • Loss per share of 33-cents vs 21-cent estimate (31-cents ex-items)
  • Alcoa sees 2020 global aluminum demand +1.4-2.4%
  • Final 2019 aluminum demand -0.4% to -0.2% vs -0.4 to -0.6% AA estimate
  • Expects 2020 global aluminum surplus between 600K to 1m metric tons
  • Full year 2019 net loss of $1.125 billion or $6.07 per share
  • Full year adjusted loss of $184m
In October, the CEO said he expected a big rebound in aluminum demand this year. At the time he said the global economy “will come roaring back once this uncertainty is behind us.” I wouldn’t say 1.4-2.4% will cut it. At some point global growth will have to pickup or there will be more plant closures and factory layoffs.
Shares are down to $19.73 from $20.18 in the after-market.

EBITDA-Humour or Making Fool ?

EBITDA (earnings before interest expenses, taxes, depreciation and amortization): Earnings before I tricked the dumb auditor.

EBIT (earnings before interest expenses and taxes): Earnings before irregularities and tampering.


Manipulation of ebitda

If dropping “ebitda” into cocktail party conversation makes you feel like a globetrotting financier, there is something you should know. It makes you sound like a MBA twit-clone with a Hermès tie and two brain cells. A fuzzy proxy for cash flow, ebitda (for the uninitiated, earnings before interest, tax, depreciation and amortisation) is the unit that investors and analysts reflexively use to talk about profit. (And what else do they talk about? Property?) It can mislead – but shouldn’t be abandoned.

The elegance of ebitda is that it comes straight off the income statement, and very high up on it where it should be purest. Coming ahead of interest expense, it is capital structure agnostic, and takes out recurring non-cash charges, too. But relying on the income statement alone ignores critical uses of cash that appear elsewhere – capital spending, changes in working capital, deferred revenue. Free cash flow captures these, but requires turning to another page of the financial report and is hard to forecast as it depends on the timing of payments. But in telecoms where capex is massive, in retail where inventories oscillate, or in software where revenue recognition is key, ebitda misses too much. (more…)

Buffett quote on EBITDA.-Really Great !

“We’ll (Berkshire Hathaway [BRK.A][BRK.B]) never buy a company when the managers talk about EBITDA. There are more frauds talking about EBITDA. That term has never appeared in the annual reports of companies like Walmart (WMT), General Electric (GE) or Microsoft(MSFT). The fraudsters are trying to con you or they’re trying to con themselves. Interest and taxes are real expenses. Depreciation is the worst kind of expense: You buy an asset first and then pay a deduction, and you don’t get the tax benefit until you start making money. We have found that many of the crooks look like crooks. They are usually people that tell you things that are too good to be true. They have a smell about them.”

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